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This week’s Book of the Week feature is Making Your Small Farm Profitable, by Ron Macher. The following excerpt is reprinted with permission from the publisher.
Twelve Ways to Sell Your Products
Principle: Direct marketing is the profit equalizer for small family farms.
There are a multitude of methods by which you can sell what your farm produces. Let’s take a quick look at some of these. The first eight listed here are direct-marketing opportunities; the others may involve selling to retail outlets.
Selling to Friends and Neighbors
This is the best place for farmers new to direct marketing to start. You and your spouse should compile a list of about 100 people you know through work, clubs, church, and so on. Include people like your banker, your barber, your letter carrier, and relatives. You will use this list for contacts, and, if you continue to sell this way, as a mailing list to let people know when your products will be available.
This is an easy way to start direct sales, but it does have some drawbacks. It requires a lot of work to contact people to sell your products. Also, because these are your friends and neighbors, they may expect to get a lower price as a friendly bonus. They may also be slow to pay. You must remind them that for you to stay in business and your farm to be sustainable, you must make a profit. A good business deal is good for both parties.
Friends and neighbors may be more critical of your product. You must explain exactly what they are getting. Customers not familiar with farming frequently assume a 250-pound hog will produce 250 pounds of edible meat. Instead, a 250-pound hog will probably produce 150 to 170 pounds of cut and wrapped meat, including chops, hams, and sausage. If you explain to your customers what to expect before they buy the meat, it is more likely that you will keep a satisfied customer. Remember, an unsatisfied friend or neighbor can cause a lot of problems.
On my farm, I sell hogs at 80 cents a pound live-weight, which means about $100 for half of a hog, with the customer paying for the processing. Processing costs run between $35 and $45, depending on how the customer wants his meat cut and whether he wants any cured meat. Alternatively, I sell 80 percent lean sausage at a flat $2.50 per pound, and get about 100 pounds of sausage from a 225- to 250-pound hog. I sold all my pork this year in the midst of 10- cent hog prices at the local sale barn. Customers were willing to pay premium prices for quality meat. My pork is fresher and leaner, and my hogs were raised on pasture and not given any antibiotics or growth hormones. My pork comes from happy hogs — and my customers know it.
Farmers’ markets are perfect for direct marketing. Consider selling at any farmers’ markets within 1 hour’s driving time. Your state Department of Agriculture should have a list of markets.
The biggest advantage of selling at a farmers’ market is that you’ll find lots of consumers in one place. It is much easier to sell a little bit of produce to a lot of customers than a lot of produce to a few customers. If you have something new and different from the rest of the market, provide taste samples to the customers. Recipes featuring your produce are also a good marketing strategy.
The major disadvantages to farmers’ markets are cost and time. Time spent at the market is time not spent on the farm. When you figure all your expenses — production costs, booth fees, labor, and transportation — selling here may not be cost-effective. Count your pennies carefully.
Check out the market the season before you intend to sell there. See what the farmers are raising, and what they are not. Is there anything missing — yellow or purple snap beans, or heirloom tomatoes such as ‘Brandywine’? Talk to the farmers and customers to see what is needed that you could raise. This is a good place to start.
If there is no farmers’ market in your area, consider starting one. Evaluate the customer potential, determine the exhibitor (farmer) potential, and design a charter — all these are very important. Decide fees, dates, and hours, and investigate insurance and location. This entails a lot of work and requires community support. If you do start a farmer’s market, holding special events at it — bake sales, festivals, concerts — can be an additional way to draw revenue. Finally, a farmers’ market will require the same thing you do — advertising to let people know it is there.
These will usually be on or near your farm and can vary from a pickup bed, to a temporary shelter, to a shop. If your own property is off the beaten track, inquire at area businesses such as discount stores and gas stations about setting up a temporary stand on their property, or pool your produce with a farmer on a good road. Make your stand attractive, with bright signs and clear information.
Roadside stands bring customers to you at little expense. If you do well, you can develop this into a tidy little on-farm shop. With some advertising, it could attract people from miles away. Unfortunately, time is again a negative factor. Time spent in the stand may be worth less than at a farmers’ market (think in terms of customer dollars per hour), unless you are on a well-traveled road with an easy exit. You will have to decide what the stand’s hours will be. Will it be open daily, three times a week, or only on weekends? Will it be open all day, or just around rush hour, when customers are heading home? In some areas, the farmer leaves a can for money and lets customers help themselves. I’m not trusting enough for this approach, although it might be a good way of disposing of excess produce. Check insurance requirements to operate a roadside stand.
Community-Supported Agriculture (CSA)
This is a subscription service where the farmer signs up customers for a monthly or seasonal fee and agrees to deliver to them a percentage of the farm output for a season. CSAs are more than just a way to sell your produce: You form a definite relationship with your customer, and your customer shares in the production risk of your farm. By receiving the yearly fees up front, the farmer avoids borrowing money and paying interest, and has a paid market before he or she plants anything. The customers know how and where their food is grown, and receive fresh produce at a good price. Customers will also get a good lesson in the vagaries of weather!
Working a CSA is relatively simple. Most CSAs have a start- ing base of about thirty customers. The customer will pay, say, $300 for 7 months, and in turn receives a weekly delivery of his percentage of the produce — probably about 10 pounds per week. Customers may be allowed to work on the farm in peak labor times to reduce their cost. Some farms have customers pick up their produce on-farm, with a “rollover” table where a customer can remove produce he or she does not want and substitute something else. Some farms provide a yearly list of what they are planting; others seek input from the customers as to their preferences.
The main disadvantages of a CSA are determining a fair price and finding customers to sign up for it. Many people are afraid to commit money before getting any product. Most (but not all) successful CSAs are near metropolitan areas with a large customer base. You don’t want to start a CSA until you have a good knowledge of what you can raise each year, and what it costs to raise it.
Value-added products are required for catalog sales, which can be a natural outgrowth from a mailing list of customers. Starting a catalog requires a lot of thought and careful market research. Printing, packaging, and mailing the catalog — that’s the easy part. The hard part is juggling supply and demand, making sure you have the necessary supplies on hand without spending too much money or creating a surplus. If you don’t have what the customer wants when he wants it, you have lost a sale and possibly a customer. If you have thousands of unsold jelly jars, you have lost a business.
I recommend catalog sales only for those with several years of experience in both farming and direct marketing of value-added products. A catalog requires a large volume of production. Factoring in the weather, amounts of production, and projected customer returns calls for knowledge and experience. It might be wise to have another farmer close by who can supply you with extra produce if you run short — but it must be of a quality comparable to yours.
About the Author
Ron Macher is publisher and editor of Small Farm Today, a magazine read by 26,000 farmers in the 50 states and in 15 countries. Ron has been a farmer for more than 30 years. His success has rewarded him many times, including being named one of the top 25 agricultural leaders in the United States by Farmer’s Digest as well. He currently serves on the Missouri Governor’s Advisory Council on Agriculture and on the USDA-SARE (Sustainable Agriculture Research and Education) Executive Committee.